Redundancy pay

Q. In the past, staff being made redundant have received two to four weeks’ full pay for each year of service. The company is again making redundancies, but refuses to accept that there is an entitlement to more than the statutory redundancy payment. What can we do?

A. Even if there is no express entitlement to an enhanced redundancy payment, for example, in writing, there may be, by virtue of custom and practice, an implied one.

In other words, if you can show that enhanced redundancy payments (ERP) have been made by the employer for a substantial period, have been applied consistently/automatically and were widely known among the workforce, it may be possible to show that an entitlement to an ERP has acquired contractual status.

Other relevant factors are whether any ERP entitlement was collectively agreed or formally explained to the workforce.

In this instance, the payments varied between two and four weeks’ full pay for each year of service. Even though there is a lack of consistency in the amount paid, it should still be possible to show that there was a minimum amount due — two weeks’ full pay per year of service — or a pattern which determined the exact amount (in a particular department, for example).

Any payments that are less than the amount due, will give rise to a claim of wrongful dismissal — termination other than in accordance with the terms of an individual’s contract.